Predicted to rise by 1.74% on last year to 557,000 units by the end of 2017.

In July 2019, overall vehicle sales in South Africa declined by -3.7% compared to the same month last year.

Passenger cars bore the brunt of that loss this July, figures released by the National Association of Automobile Manufacturers of South Africa (NAAMSA) show: -8.2% versus the same month last year, or a decline of 2,617 cars to just 29,477 units.

That decline is in line with falling sales figures for the passenger car segment across the southern African region.

However, LCV sales in South Africa were up significantly: 13,852 units sold, i.e. +2.9% compared to previous July. Truck sales were also up, both in the medium (+14.9%) and heavy (+21.4%) segments.

The corporate fleet market accounts for approx. 65% of all new vehicle sales, which includes self-owned.

The higher the value of the vehicle, the higher the percentage goes. For example, 90% of LCVs and executive cars are within the corporate fleet.

Around 65% of the fleet park is financed on open-ended leases (straight financing and no services), the rest are cash purchases.

Open ended leases are provided primarily by the major 4 commercial banks.

Estimates for the number of closed end leases/full service leases (referred to in SA as Full Maintenance Rentals with services such as maintenance plans) are around 65,000 vehicles. These are provided by Fleet Leasing suppliers such as ; ABSA, Avis Fleet, Bidvest Bank, Eqstra, Fleet Africa, Standard Bank and WesBank

A small percentage of the above 65,000 vehicles are on Operating Leases.

The Self-owned fleet park (referred to as an Allowance in SA) is in excess of 600,000 vehicles (25% of total fleet park). Current fringe benefit tax rates are pushing companies (and individuals) to move to a company method of providing vehicles to employees.

Top 5 fleet brands (fleet market)

VW

Toyota

Ford

Nissan

Hyundai/Kia

*Source : NAAMSA

GM, Chevrolet, Isuzu would normally be in the top 5 but GM has recently exited SA and it is as yet unclear how this will impact the market.

As specific information is difficult to source in SA, experts believe that funding is 50/50, in terms of funded in some way verses outright purchase. However, the outright purchase, in turn, is likely to be funded in some form (bank loan, company overdraft and so on).

6.1 Outright purchase:

Definition The company pays upfront for the vehicle and takes ownership immediately

The fuel price varies across the country largely due to transportation costs. From a fleet point of view petrol is a fixed price and diesel can be discounted. Currently July 2017 Petrol price in Johannesburg is ZAR 12.82 litre (93 octane) and Diesel ZAR 11.27 litre. (1USD = 13.00 ZAR)

Local Fuel price has not seen the full benefit of reduced oil prices due to the devaluation of the local currency and taxes, and has increased by 16% since January 2015.

Fuel card solution: fleet fuel cards are provided by the four major banks and can be used anywhere in the country across all fuel supplier networks. Fuel, services, maintenance and tolls can be paid for. There are in the region of 650,000 cards in use currently, mainly used by corporate fleets.

Most cards are post-paid but high volume users are required to lodge deposits

The TC calculation for vehicle selection has become increasingly important over the last few years. The figures (based on 30000 Kms per annum) are typically: depreciation = 22% , interest = 15% , fuel = 44%, maintenance = 10 %.and insurance 9%,

Vehicle prices in South Africa are increasing above local inflation rates due to the devaluation of the local currency (ZAR). This similarly affects parts and fuel pricing.

Resale prices are sustained by the above average increases in new car prices.

Tracking / Telematics systems in South Africa are widely used by fleets and are supplied by well established companies, who in many instances provide world-wide services. Suppliers include; - Altech Netstar, Car Track, CTrack, Mix Telematics and Tracker.

The main use of tracking was initially stolen vehicle recovery but in line with world trends utilisation management is gaining increasing focus.

As a large as dispersed country, traffic conditions outside of major centres are not a problem. However, within major cities, specifically Johannesburg, Cape Town and Durban traffic congestion is a problem in rush hour.

Mobility solutions (car sharing, taxi, Uber, car pooling…) Uber is available in South African cities and is gaining traction as a service to companies. Poor public transport, distances to work, costs and a culture of vehicle ownership will inhibit an accelerated shift to alternative transport methods for company use.

The scope of fleet financing and management services in South Africa matches that of Europe and the USA due to a strong banking sector and quality fleet management companies. It is inhibited by a small market that has not given due recognition to the costs of operating a vehicle fleet.

There was a significant shift away from Company Cars to a Car Allowance system due to taxation, companies not wanting to manage fleets and the need of driver to own their own vehicles. Additionally, companies have in recent years outsourced their logistics requirements to industry specialists, further reducing company fleets.

However, vehicle and operating costs continue to rise above inflation and this continues to be the opportunity for fleet management services if they can achieve can savings.

The use of telematics to measure driver behaviour (scoring system) is being utilised by local vehicle insurers to set insurance rates. Insurers are promoting the concept of improving driver scores to reduce insurance costs. It is gaining traction.

Safety

Safety including driver training is focussed on company fleets. Multinationals are imposing their international standards and norms on their local subsidiaries but the volume is insufficient to drive national changes.

Unlike Europe there have not yet been published cases where the liability of driver behaviour and accidents etc. has been passed to the company / employer.

Mobility

The public transport system in South Africa is poor.

Uber has a presence which is reaching companies. However, it is early days.

Driver behaviour

South Africa has a very high road accident rate, largely as a consequence of driver behaviour & poor discipline, a high number of poorly maintained private vehicles and distances. The Government does not appear to be making progress in solving this serious problem.

Country development

Development within the country is focused around cities, which is giving rise to increased car populations and rush hour congestion.

Road infrastructure on the national roads is good and well maintained. Less so on provincial and country roads to the point where the condition is often poor.